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All eight of the indexes on our world market watch list closed the week with a gain. In fact, the average gain of the eight at 3.41% is the biggest weekly increase of 2012. The three EU indexes were the top performers, with France's CAC 40 and Germany's DAXK rising more than five percent (5.60% and 5.16% respectively). The next four indexes, lead by the FTSE 100, finished the week with gains in the top half of the three percent range. Even China's last-place Shanghai was up a respectable 0.63%.

In recent weeks I've pointed out the high volatility of these world indexes. Here is a snapshot of the weekly average of the eight for the past nine weeks:

-1.31%, 1.36%, -1.42%, 2.02%, -1.38%, 1.48%,-2.25%, -1.54% and 3.41%.

This week only one index on the watch list is in bear territory -- the traditional designation for a 20% decline from an interim high. See the table inset (lower right) in the chart below. The Shanghai Composite, the chronic big loser, is now down 41.60% from its interim high of August 2009. Japan's Nikkei was in the bear house last weekend, but its strong gains. At the other end of the inset, the S&P 500 is now only 3.86% off its interim high, set in mid-September, the day after QE3 was announced. The FTSE 100 is close behind at 4.47% from its interim high of February 2011.

As for year-to-date performance, here is a table highlighting the 2012 year-to-date gains, sorted in that order, and the 2012 interim highs for the eight indexes. India's SENSEX has taken the top spot, and the Germany's blowout performance lifted it to a close second. The Hang, last week's leader, has now dropped to third place. In contrast, the Shanghai continues to hold the dubious distinction of being the only index with a YTD loss, down 7.82%.

A Closer Look at the Last Four Weeks

The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I've also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.

(click to enlarge)

The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.

(click to enlarge)


A Longer Look Back

Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX, Hang Seng) is readily apparent, especially the SENSEX, but the trend over the past two years has not been their friend (make that three years for the Shanghai).

(click to enlarge)

Source: World Markets Weekend Review: The Best Week of 2012